Thursday, September 21st, 2017 MST

Is “helicopter money” about to become a reality?

In “Cries for more money creation grow louder,” (Feb. 29, 2016) I noted that Financial Times chief economic commentator Martin Wolf called for central banks to deposit money directly into the accounts of all adults in an effort to stimulate economic activity.

Now, John Mauldin, noted publisher of numerous advisory services, recently wrote that former Fed chairman Ben Bernanke was in Japan recently and may have urged just that.  While there, Bernanke had private meetings with Prime Minister Shinzo Abe and Haruhiko Kuroda, head of the Bank of Japan.

helicopter dropping money

Japan’s policies of fiscal deficits, zero interest rates and quantitative easing clearly are failing to get Japan’s economy moving.  “Greater boldness” is what Wolf calls for, and “helicopter drops” of money into checking accounts would be the boldest move imaginable.

If such a thing is implemented, I guarantee that those in favor of it will promise that it will be “a one-time event.”  But, it will not.

During the French Revolution and Germany’s hyperinflation (1917-1921), the two most infamous instances of the printing of huge quantities of paper money to stimulate economic activity, there were cries for still more to be printed.  It’s has always been the same.  If larger quantities had been printed, paper money advocates argue, the programs would have been successful.

If the Japanese go with helicopter drops, I can hear Paul Krugman telling them that not enough money was deposited.  During the WFC in 2008, he called for the Fed to print $9 trillion.  The Fed printed only about $4 trillion.

Ben Bernanke became notorious for talking about “helicopter money,” but the concept was discussed decades ago by Milton Freedman, thereby giving it more credibility with the establishment.  Now, will we see it implemented?

I have no idea if Japan will go down this road, but it would not be much of a stretch from zero interest rates and quantitative easing.  In such an environment, gold and silver will do very well.  Perhaps the metals recent price rises have already portended still more extreme moves in the establishment’s flawed thinking that economies can be “managed.”  They cannot.

4 Responses to “Is “helicopter money” about to become a reality?”

  1. RK_in_TX

    Here’s a “modest proposal.” Let’s all say “Yes” to “helicopter money” on one non-negotiable condition. It has to be exclusively in the form of physical gold or silver, to be delivered directly into the hands of the recipients. We’ve been lectured to for decades that paper or electronic money is just as “real.” Well then, the advocates of handing out free money to everyone should have no objection to providing me with my share of that money in the form of physical gold or silver. Right? Everyone together now, “I’ll take mine in gold, thank you!”

  2. Eric Mecham

    To me, the phrase “the devil is in the details” is never more applicable than it is to this subject. Certainly there are a number of methods available to accomplish this, but we all know the Fed will never create money without someone (in this case, ALL of us) being on the hook for it. So the problems will be, 1) how would it be implemented, and 2) would that ever get through Congress?

  3. Kevin Timmons

    They will never stimulate the economy this way unless its a big deposit (6 months wages or more). People will spend it quickly and then we are back at square one. It’s free money, no one is ever frugal with that. Morons came up with this idea. Short sighted Morons! This stimulus would last about as long as a fart in the wind.
    The left’s answer to everything is more taxes.

    The only way to fix our problems is to stop re-electing anybody, period. They are always working on buying votes with taxpayer money. No re-election, no re-election campaign fund needed. Simple. They keep selling influence for votes and we keep falling for it. Stop it!!!!!!!!

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